Project Summary Covalent modifications of histones, such as acetylation, methylation, phosphorylation, and ubiquitylation, are essential regulators of chromatin structure and function. Defects in the regulation of these modifications have causal roles in numerous developmental disorders and diseases. However, the mechanisms that target histone-modifying enzymes to specific genomic locations and regulate their enzymatic activities are not well understood. Our long-term goal is to understand how diverse histone modification activities are coordinated to initiate and maintain different epigenetic states. Heterochromatin preferentially assembles at repetitive DNA elements. It is critical for setting up gene expression patterns during development and maintaining genome integrity by rendering repetitive structures recombinationally inert. It is also crucial for functional organization of vital chromosomal structures such as centromeres and telomeres, ensuring the accurate segregation of genetic material during mitosis and meiosis. Heterochromatin formation requires the concerted actions of diverse histone modifying enzymes as well as the RNA interference (RNAi) machinery. Paradoxically, transcription of the underlying repetitive DNA elements is also required for proper heterochromatin assembly, although heterochromatin generally represses transcription. These transcripts not only serve as substrates for RNAi to produce small interfering RNAs (siRNAs), but also as a platform for the recruitment of histone-modifying enzymes through siRNA-containing effector complexes. Histone modifications in turn stabilize the binding of the RNAi machinery to heterochromatin. As a result, processing of transcripts by RNAi and recruitment of histone modifying activities are tightly coupled, making it difficult to identify the initial signas that target repetitive regions for heterochromatin assembly. We have recently discovered that loss of a number of factors allows cells to bypass the requirement of the RNAi machinery for heterochromatin assembly. Our studies of the one class of these factors, the Mst2 histone acetyltransferase complex, revealed that reducing RNA polymerase recruitment to heterochromatin during DNA replication is essential for the inheritance of the heterochromatic state through generations. The goal of this proposal is to further understand how loss of diverse activities could bypass the RNAi requirement for heterochromatin assembly. These analyses will provide molecular mechanisms of how heterochromatin-promoting activities are regulated to control the initiation, spreading, and maintenance of heterochromatin domains.